CA: Retail Sales

Thu Jul 23 07:30:00 CDT 2015

Consensus Actual Previous Revised
Month over Month 0.6% 1.0% -0.1%
Year over Year 2.7% 1.7% 1.9%

Retail sales comfortably exceeded expectations in May with a 1.0 percent monthly spurt that lifted annual growth of purchases to 2.7 percent, up from a firmer revised 1.9 percent in April. However, volumes performed rather more sedately and a 0.4 percent monthly rise here made for a 2.5 percent increase versus May 2014.

Within the mid-quarter rebound in nominal sales there were monthly increases in nine of the eleven reporting subsectors. Motor vehicles and parts advanced 1.3 percent thanks to a 2.0 percent jump in new vehicles but even excluding this category purchases rose a solid 0.9 percent. Elsewhere, gasoline was up 1.9 percent and electronics and appliance stores 6.1 percent. Food and drink recorded a 0.6 percent gain and general merchandise climbed 0.7 percent. The main faller was sporting goods, hobby, book and music stores (1.8 percent) ahead of clothing and accessories (0.5 percent).

May's rebound puts average retail sales in April/May 1.6 percent above their first quarter average when a 1.0 percent decline did nothing to prevent the first contraction in total output in nearly five years. As such it at least offers some hope that the BoC's new second quarter GDP growth forecast (minus 0.5 percent saar) might be on the soft side. That said, it will probably take a string of respectably firm data to convince financial markets that a third cut in official interest rates this year is completely out of the question.

Retail sales measure the total receipts at stores that sell durable and nondurable goods.

With consumer spending a large part of the economy, market players continually monitor spending patterns. Data are available both for total retail sales and those excluding autos and for 16 different store specializations. Since autos account for over 25 percent of retail sales, the sector can have a pronounced impact on overall sales given their volatility. Retail sales are used to estimate the goods portion of personal consumer expenditures in the quarterly GDP accounts, accounting for about 50 percent of the total.

The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

Retail sales not only give you a sense of the big picture, but also the trends among different types of retailers. Perhaps apparel sales are showing exceptional weakness but electronics sales are soaring. These trends from the retail sales data can help you spot specific investment opportunities, without having to wait for a company's quarterly or annual report.